CRACKS IN THE PILLAR OF POWER: Top Financiers Expose Fissures Within the 1%

In recent weeks several big finance insiders have publicly exposed fault lines in the U.S. financial system. Their inside views are telling us that the corruption we see is real and, more importantly, those in the system know it.

Financiers that break from the corruption of gluttonous greed can become the conscience of a sector that seems to have no conscience. Let’s hope their courage is contagious and others follow their lead. We need a revolt from inside big finance that will help radically transform finance from greed to generosity, from gluttony to moderation and from selfishness to community benevolence.

A thorough examination of the corruption of big finance came in a recent shareholder letter from Robert Wilmers, the Chairman and CEO of M&T Bank. He laments that “it is difficult, for one who has spent more than a generation in the field, to recall a time when banking as a profession has been publicly held in such persistently low esteem” noting that polls show “only a quarter of the American public expressed confidence in the integrity of bankers.” He recognizes that this is something big finance has brought on itself: “Since 2002, the six largest banks have been hit by at least 207 separate fines, sanctions or legal awards totaling $47.8 billion. None of these banks had fewer than 22 infractions; in fact one had 39 across seven countries, on three different continents.

And, he highlights the salary disparity between bankers and other Americans reminding us that this is a recent development. Just a few generations ago “the average compensation in the financial services industry was exactly the same as the average income of a non-farm U.S. worker.” But today: “At a time when the American economy is stuck in the doldrums and so many are unemployed or under-employed, the average compensation for the chief executives of four of the six largest banks in 2010 was $17.3 million – more than 262 times that of the average American worker . . . it is hardly surprising that the public would judge the banking industry harshly – and view Wall Street’s executives and their intentions with skepticism.”

How did the finance industry change into this corrupt mass? Wilmers points to the repeal of Glass-Steagall, a law “prudently erected in the wake of the Depression, kept investment banks apart from traditional banks.” When banks were credible members of the community they “saw public service as part of their obligation” and “played a clear, if limited, role in the economy: to gather savings and to finance industry and commerce. Trading and speculation were nowhere included.”